Meridian Communications claimed at the High Court yesterday that Eircell was seeking to put it out of business because it wanted to maintain its dominant position in the mobile phone market.
Meridian, and Cellular Three Telecommunications Limited, both with registered offices at Merchants Quay, Dublin, are seeking damages from Eircell in a case that is expected to last up to four weeks.
When the case opened before Mr Justice O'Higgins yesterday, Mr John Gordon SC, with Mr Richard Nesbitt SC, for Meridian, said it was about a simple but fundamental dispute in which his clients were alleging that Eircell was seeking to stop, or delay as long as possible, the process of liberalisation in the mobile phones market.
Around 1996/97, Eircell introduced the concept of volume discount on call time to the mobile market, with percentages ranging from 10 to 40 per cent depending on usage. Meridian entered into an agreement with Eircell to avail of air time at a discounted rate. Meridian intended to partially pass any savings it made through the volume discount scheme on to its own customers.
Counsel said Meridian bought air time from Eircell and sold it on to its own customers. This was not a unique concept and enterprises similar to Meridian's had existed for years in the fixed-line market. Such enterprises also operated elsewhere in Europe and were a significant part of the mobile phone industry there.
Early in 1999, Eircell indicated it would not be renewing its volume discount scheme with Meridian and it was this which led to the litigation.
Eircell disputed Meridian's right to pass on discounts and claimed the discounts were exclusive to Meridian and its employees. What Meridian did with its discount was none of Eircell's business, counsel argued.
Counsel said the plaintiffs encountered other difficulties in business dealings with Eircell. When new Meridian customers wished to change from Eircell, there were delays in issuing transfer forms. There were also delays and difficulties in Eircell's billing procedures to Meridian and this delayed Meridian's bills to its own customers, causing the company a severe cash-flow problem.
Meridian and Cellular Three, a wholly-owned subsidiary of the former, are claiming damages for breach of contract by Eircell and abuse of its dominant position. They are also seeking a declaration that Eircell be stopped from terminating the air time discount agreement.
In its defence, Eircell says both plaintiffs are asking the court's assistance in providing a network or telecommunications service for which a licence is required, which Meridian does not hold. It pleads the proceedings should be dismissed by reason of this alleged illegality.
Eircell further denies that there is a market in the provision of air time for re-sale within the State and says it has not conspired to damage the economic interests of Meridian and Cellular Three.
The action continues today.